1st Mar 2023 12:16
(Alliance News) - Aston Martin Lagonda Global Holdings PLC shares surged with investors betting on better days ahead for the luxury carmaker, as Executive Chair Lawrence Stroll puts his stamp on the company.
Canadian Stroll became executive chair in April 2020. He was part of the Yew Tree consortium which bought roughly a 20% stake in the company back in 2020.
Stroll is father of Formula 1 race car driver Lance Stroll. He bought the Racing Point F1 team, where his son raced, back in 2018. The team shortly after rebranded as Aston Martin, with the younger Stroll still in its driver pairing.
On the track, the team has shown glimpses of promise since the rebrand, but has still fallen short of providing regular competition for some of the sport's bigger names. It has been successful in tempting two former world champions to race for the team, however.
Off the track, investors may be buying into Stroll's vision too. The stock was up 12% at 225.42 pence each in London on Wednesday afternoon. Since the start of the year, shares have surged 45%. It now has a market capitalisation of GBP1.58 billion.
Shares remain some way off its GBP19 initial public offering price, however.
"There's no question that Aston Martin has been a car crash on the stock market. Shareholders are sitting on eyewatering losses, but there have been some signs recently the luxury car maker is sputtering into life," AJ Bell analyst Russ Mould commented.
The luxury carmaker's revenue rose 26% to GBP1.38 billion from GBP1.10 billion, though its pretax loss widened to GBP495.0 million from GBP213.8 million. Its bottom-line was hurt by a non-cash foreign exchange charge of GBP156 million amid a revaluation of dollar debt. Its foreign exchange charge in 2021 totalled just GBP12 million.
Aston Martin said it was profitable in the final quarter, however, reporting pretax profit of GBP16.3 million and swinging from a GBP25.2 million loss. Fourth quarter revenue rose 46% on-year to GBP524.3 million.
Stroll said: "2022 saw Aston Martin continue to build on the strong foundations that have been established during my three years as executive chair. While the last 12 months presented industry-wide challenges, we look to the future with renewed confidence in our ability to deliver on our vision, and the targets we have set. Despite the operating environment, we ended the year with significantly improved growth, margin enhancement and positive free cash flow in Q4, exiting 2022 with the strongest order book in many years.
"As I have said before, I knew it would take multiple years to build Aston Martin into the world's most desirable ultra-luxury British performance brand. With the heavy lifting behind us, we are now poised to see the results of this transformation, starting in 2023. In addition to celebrating our 110th anniversary and our exciting line-up of Specials, it will also see the start of our next generation of front-engine sports cars, which will truly reposition Aston Martin for the future."
Stroll said the company is on track to meet its target of generating annual revenue and adjusted earnings before interest, tax, depreciation and amortisation of GBP2 billion and GBP500 million, respectively, by 2024/2025.
AJ Bell's Mould said the reaction to Aston Martin's earnings was helped by expectations being low. "Under the bonnet", however, the finer details are promising.
For 2023, it expects to deliver 7,000 wholesale units, a rise of 9.2% from 2022's 6,412. Last year's outcome was a 3.8% improvement from 6,178 in 2021.
It expects to grow its adjusted Ebitda margin to around 20%, from 13.8% in 2022, which itself was an improvement from 12.6% in 2021. In the fourth quarter alone, its adjusted Ebitda margin climbed to 21.1% from 18.3% a year prior.
"The company is finally delivering some growth; it finished the year by generating free cash flow and it has improved margins," Mould added.
The Gaydon, Warwickshire-based firm celebrates its 110th anniversary in 2023. There have been a series of changes at the top in recent years in a bid to boost its fortunes.
Aside from Stroll joining, Chinese vehicle manufacturer snapped up a 7.6% stake in Aston Martin in September 2022. In July, it said Saudi Arabia's Public Investment Fund also invested in the company.
In May, Aston Martin named Amedeo Felisa as chief executive officer, replacing Tobias Moers. Felisa was CEO of Ferrari NV from 2008 and 2016.
Moers was brought into Aston Martin by Stroll in 2020, having been CEO of the AMG sports car arm of Mercedes-Benz.
Aston also hired Roberto Fedeli as chief technical officer, taking on the second role held by Moers. Fedeli was at Ferrari for 26 years. Aston Martin said he is considered the creator of Ferrari LaFerrari, the Modena, Italy-based company's first hybrid supercar.
The clamouring for Italian sports car pedigree was somewhat ironic, given that the British company has long been compared to its Maranello-based industry peer.
While Aston Martin has made some progress, Hargreaves Lansdown analyst Sophie Lund-Yates some "working capital headaches" still need to be soothed.
"The bulk of cash only comes in when cars are delivered. That should start unwinding at speed, but it's something to keep an eye on. Ultimately, Aston Martin has a revered product offering but there are plenty of financial plugs that need filling. Until that happens further capital raises can't be entirely ruled out, despite the GBP654 million equity capital raise undertaken last year," the analyst added.
By Eric Cunha, Alliance News news editor
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